Libra has at least a two-year wait ahead of it if the central bankers and finance ministers of the world’s richest countries have anything to say about it.
Yesterday, a leaked draft report for the G7 leaders on digital payments said the organization opposed Libra’s launch until global stablecoins are regulated, according to a Reuters report.
Then on Oct. 13, the Financial Stability Board released a report commissioned by the G20 that laid out a timeline for the assessment of those rules.
While national governments are expected to have regulations in place by July 2021, the assessment—and possible revision—to coordinate national rules will not take place until the next year.
Libra recently hired several top executives—including President Stuart Levey—with strong credentials in regulatory enforcement of financial laws.
One rule for all
The FSB press release said global stablecoin issuers “are expected to adhere to all applicable regulatory standards and to address risks to financial stability before commencing operation.”
Moreover, it said that its members “agree on the need to apply supervisory and oversight capabilities and practices under the ‘same business, same risk, same rules’ principle.”
To this end, the FSB has made “10 high-level recommendations that promote coordinated and effective regulation, supervision and oversight” of global stablecoins to address the risks they pose to financial stability at both the domestic and international level.
Among the issues the G7 report said must be addressed are ensuring proper anti-money-laundering (AML) regulations and market integrity protections are in place.
This is to ensure that global stablecoins will not “undermine financial stability, consumer protection, privacy, taxation or cybersecurity,” according to Reuters.
An earlier G7 report included sound governance requirement by stablecoin issuers, cybersecurity protections, data privacy and tax compliance as other concerns to be addressed.
Until these issues are addressed, the launch of Libra and any competitors must be delayed, the G7 added.